Hello, everyone. Thank you so much for joining myself and attorney Christine Kingston. As we continue to talk about her book, how to tame the student loan dragon, if you haven’t picked up a copy, be sure to do so on Amazon. Right now, we’re going to jump right back into our conversation. Get your pen and paper out. Class is in session,
You know, taking the, making the most out of that FASFA with the grants and scholarships. The other thing that I was going to say too is even when they’re kids, you know, we talk about college savings plans, the 5 29 college savings plan. Okay. Now here’s what I know about that college savings plan. And when I read the FAFSA, it hit me like a ton of bricks. The reason why financial advisors suggest grandparents have the 5 29 plans rather than mom and dad is what so they don’t have to disclose it on the FAFSA. It bypasses the expected family contribution. And top of that is if you actually distribute money to the grandkids, cause my husband and I have one for our grandkids. My parents never did, but you know, so glad we’re in a financial spot space to do that for our grandchildren. So, the reason why we don’t suggest mom and dad do it is because mom and dad will have to disclose all of that money on the FASFA and it will lower the, the scholarships and the, and the student loan benefits because they’ll force the outcome and the force that money to go in towards the college.
If the grandparents have it, then the parents don’t have to report it on the FASFA. And then when the children take that money for college through the 5 29 plan that grandma and grandpa set up for them, they only have to claim, I believe 50% of that. So you check and verify that information. I just looked at that this morning, but then they, the children, the students don’t have to disclose all of it either. And so that could be doled out in small chunks for them to maybe bait pay for books or extras or, you know, the full tuition if they have enough, depending upon what’s in that savings plan. So that’s the reason, and it’s also for estate planning and tax benefits with a generation skipping but that’s the financial planner stuff, but for our purposes, it really supports the FAFSA. It bet it helps the students benefit more by a lower expected family contribution because grandma and grandpa don’t have to fill out the FAFSA only mom and dad do. So that’s pretty, pretty cool little trick there that I discovered in researching that today. So that’s exciting.
Yeah. Now I want to ask the curve ball question here. We want everyone who wants to go to college to go to college, but what happens is, for the grandparents, cause it just popped in my head because you just brought it up. I had never heard of it. What if the student doesn’t end up going to, what is the effect for the grandparents in the 5 29
We remain in full control of the 5 29 funds. We can cash that out at any time and we can probably move it to another plan. But I haven’t researched that with my financial advisor at this time, so that the grandparents remained in full control, which means, and it’s transferable, meaning we have 1, 5 29 plan. Our 5 29 plan could go to any one of the kids. And what, I don’t know. The only thing I don’t know is if I can take part of it for grandchild number one and part of it for grandchild number two. But what I do know is that grandchild number one never goes to college. Then in grandchild, number two wants to go to college. Then grandchild number two can have the money. So it’s not where mark first. That’s right. It’s not specific to one child. and if, no, one of, if not one of them goes to college, then my husband and I can claw that back and put that towards our own retirement.
That’s good news. I always thought that it was like a use it or lose it kind of like the healthcare savings on your job.
And it may be different if it’s mom and dad that do it right. And the rules are different if you’re a parent versus a grandparent. So I’m only speaking from a grandparent perspective and my own experience with that because we do have one for the grandchildren. So it’s more beneficial if grandma and grandpa set it up and it’s better for the children to do it that way for both tax purposes, estate planning purposes and for the FASFA, which is what we were basically focusing our talk on a little bit. Yes,
Yes, yes. So in this discussion, we have been such an on chapters two and seven in your book, how to obtain the student loan dragon. Now you can go and pick this book up. Where, where would you like for people to get a copy of this book
This book is available anywhere books are sold. And I want to give a shout out to Barnes and Noble who put it up first. It’s also available on amazon.com, which we love to hate. But if you insist on sending Jeff Bezos to the moon again, you can buy it on Amazon. So yeah, it’s available wherever books are sold, absolutely on the internet
And ask your libraries if, check your library. and if they don’t have it, tell them to add it as Stanford and you can always get in touch with us at this needs to be said, because we want to see this information and as many people’s hands as possible when they’re pre pre-planning. I think, my going to college was just kind of a shoulder struck. Let me go see if I can do it. So there wasn’t a plan with what ideas. So when you say plan, you’re going to have to draw me a picture, Christine, because mine, I don’t remember having the financial talk and sitting down or what should be happening during pre-planning you mentioned about a year out earlier when we were talking, to start looking at things, right
Yeah. I think, you know, a year out, usually kids, by the time they get to high school, they know whether or not they’re going to go to college or whether or not that’s what they’re going to do the hard part is when they’ve got the family and the parental pressure, and there are some cultures in our world that have a, an extreme pressure to put their children through school too, you know, because they have to be a doctor dentist or lawyer and that’s challenging because if it’s not in the heart of the student, a they’re not going to perform as well be they’re not going to be happy you know, but again, it’s, it’s, it’s personal, right Whether you go to college or not, and get a college degree is a very personal decision. Once you’ve made that choice and you know that you want to go to college, then I think there’s got to be some time in figuring out what do you want to be when you grow up.
Right and what is that going to possibly look like now I took my undergraduate degree in speech communications back in the 19 hundreds before it became popular. but you know, some degrees are generic, like a speech communication degree that can translate into my legal career that I’m in currently, being a podcaster, and, and speaking effectively as a podcast or public speaking, counseling of any type teaching, for example, it translates into a multiple industries so there are degrees out there that are useful skills that will translate and transcend no matter what you end up doing. There are some degrees that right now, like for example, I’m finding pharmacists, okay. There are a lot of pharmacy schools out there and there’s a lot of people becoming what I call legal drug dealers, a pharmacist. And, but there’s no jobs. So research for yourself, the job market and the future job market for what it is that you’re looking to get into.
And I think right now another space for our young people is leadership. So leadership skills are very important to have, if you’re going to go into leadership, politics, government, or those types of jobs where you’re looking to stir things up and make changes. Because I know that our young people are stirring things up and changes are coming because they are breaking gender roles and gender barriers and, and all different kinds of things are happening and I’m cheering them on. But I think what they need to do is decide, are you going to get into leadership roles Well, what skills do you need to have that job that you want to have Because you’re going to be doing it for a long time and you have to enjoy it for the most part again, unless your family is pushing you into it. But if it’s something that you enjoy, you’re going to be making money over the long-term.
It’s going to take a bit to ramp that up, but what skills do you need Right. You know, a lot of times I’m saying to people right now school’s over-priced college tuition is way over- priced. It hasn’t backed down yet. Tuition has gone up by 230% since I went to school and the jobs are just not paying enough to, to pay the student loan debt, meaning I’m seeing lawyers, I’m seeing therapists, I’m seeing people having to do free residencies when the student loans become due and it makes it almost cost-prohibitive for them to finish the gauntlet and get into the career of their dreams while they’ve got this student loan bill coming due. It just, it makes it challenging for even because we know we need mental health. We know we need more counselors and therapists, but it’s difficult for them to get through those programs and then get out in the real world and then start earning a living.
It’s that, that setting those college graduates back in that. And I think the tuition right now, it’s almost overpriced go to a community college instead of straight into the university, cut your expenses. Don’t change degrees when you get into the middle of college, you that’s the part of the planning. Figure it out before you get in there, because when you change your direction, I’m going to be a speech major. Nope, I think I want to go into science now so what happens is you end up having to take more classes. It takes you longer to, to get the degree and it costs more money, you know, and I think some of the problems I see as well, Catherine, we’ve got professors, people let’s say you want to be a teacher yourself, but you have one of your own professors in the university giving you a hard time.
These people have control over whether you even graduate. So now your future is in the hands of some stranger that might have an attitude and might cost you all of your time, piece of sleep and effort to get where you want to go. And then someone puts a block in. I’ve seen that happen. When people come to me to get rid of their student loans, I hear these war stories from prospective clients of all the things that can go wrong on your way to your beautiful career. Wow. So it’s, it’s, these are things to keep in mind, right But if you want something perseverance and persistence will always get you there at the end of the day always having a good attitude and maybe trying to work around those bad professors, cause we’re going to get negative people in our lives, no matter what we do, because there’s almost half of them on the planet running around right now.
So all of that needs to be navigated and that’s part of the pre-planning that has to go into this. There’s a lot of thought if people would put more thought into it, I think they were going to they’re going to get better results. They’re going to get, a clearer direction. They’re going to save a lot of time, money and peace in their lives, knowing ahead of time, what the direction is. And I think the biggest challenge there is, you know, w people don’t always get that growing up. And I certainly didn’t get that. And I had to figure things out on my own. And so the best you and I can do is to help save these young kid’s money and time by giving them some of this advice that we had to learn the hard way. Right! So that’s what we want. We want to ease the burden for them. They don’t have to learn it the hard way. Here’s the, here’s the book, here’s the roadmap, how to tame the student loan dragon, you know, it starts with the pre-planning. Right! And then we can talk about what happens when they get into school and they have to understand all of that, which kind of ties into, you know, figuring out what types of student loans to even get. Right!
Hmm….. Right! Let me ask you one more question as far as the student, no longer being on the parents’ taxes, what about their home address
It’s probably better that they not live there either, right If you’re a dependent in any way, because they’re going to look at the address, they’re going to ask you who you live with. and they’re going to ask you, you know, w what are your expenses and how are you maintaining your finances, right I’ve seen it where the kids will transfer to the parents’ address or things like that. And then keep in mind, though, if you’re going across state lines, there are additional tuition fees and costs for being an out-of-state student. So if you’re going to stay in state, right, if you’re going to stay in state, then maybe you move from LA to Orange County, right. Move to grandma’s house, or use grandma’s address. And now you’re not even in your parents’ home and your grandma and grandpa are making you pay rent or something. so I think it’s a benefit if they can do it, if they live somewhere else, they’re even more so making themselves financially independent for that, that spot. So that, you know, the, the more, the sooner you don’t have to report your parents’ money, the more you’re going to be eligible for your own grants and scholarships.
Got it! Got it and what I’m thinking of. And I want us to move to grants and scholarships in our conversation. And what I was thinking of with this is, I think, and you may know this better than I do or know this answer for me. Christine is that, that’s where I, financial trouble start. I don’t know about people who don’t go to college, but I think that’s where financial troubles start, because it’s kind of like going online. You want to be on this site, but you have to agree to that, to the terms in order to go to this site. So you don’t read the terms, you just know I’m going to get to go to this site. So you don’t read the terms or understand the terms of schooling but I know I have to sign this stuff so that I can go to school. So I’m glad that we’re able to have this conversation so that they don’t have to do what we did or do what I did, with the non.
Thank you so much for joining us today on “This needs to be said”, we’ve been talking with the attorney, Christine Kingston, and we have to interrupt this and come back with part three. And our next episode.